Despite the violent conflict between Israel and Hamas, international rating agency SP has affirmed Israel sovereign rating at AA-, with a stable outlook.
SP sees Israel’s net government debt rising in the coming years from 71% to 76% of GDP.
SPs report states that an assumption underlying Israel’s high credit rating is that a cease-fire will eventually take hold as it has in previous flare-ups. It points out that in the past these have been short and have not had any lasting effect on the Israeli economy, although it also says that the risk is higher this time because of the social unrest within Israel.
On the political uncertainty in Israel and the lack of a state budget, SP states that these things too have not materially affected the economy.
On the positive side, SP mentions the vaccination campaign in Israel and its contribution to the recovery of the economy from the effects of the coronavirus pandemic. The main negative factors affecting the credit rating cited by SP are geo-political risks, the high debt burden, and political instability.
SP sees a rapid recovery by the Israel economy this year, with GDP growing by 5%, on the assumption that the security tension abates.
Published by Globes, Israel business news – en.globes.co.il – on May 18, 2021
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